The European Commission today told France it has until 2013 to put its public accounts in order, defying objections from Paris that it would need one extra year, dpa reported. Joaquin Almunia, the European Union"s economic and monetary affairs commissioner, imposed a similar deadline on Germany, despite its budget deficit being more than double that of France. France"s budget deficit is expected to reach 8.3 per cent of gross domestic product (GDP) this year, well above the 3-per cent-limit set by the bloc"s Stability and Growth Pact. Germany"s deficit is estimated at 3.4 per cent this year and forecast at 5 per cent in 2010. But while Germany has said it will endorse Almunia"s decision, France has already indicated that it will need one extra year to reduce its budget deficit to within 3 per cent. Speaking after talks with fellow EU finance ministers in Brussels on Tuesday, French Economy Minister Christine Lagarde had described the commission"s proposed deadline as "very unrealistic", adding that meeting it would prove "extraordinarily difficult". France was already granted a one-year reprieve after the commission acknowledged that the worsening economic crisis had impacted budgets "beyond the control of governments." In the case of Germany, officials in Brussels had quietly expressed concern that tax cuts worth 24 billion euros (36 billion dollars), agreed by its new centre-right government, could worsen the country"s battered public finances. But Almunia said Wednesday he had been re-assured about Berlin"s commitment to the Stability and Growth Pact by the new German finance minister, Wolfgang Schaeuble. "We all agree on the need to design clear and credible exit strategies to reduce public deficits and debts, which have been dramatically increased by the crisis," Almunia said. "Applying the pact and devising such strategies (...) is necessary in order to avoid an increase in long-term interest rates that would raise the cost of servicing the debt and the financing costs for families and companies, putting a break on the economic recovery itself," Almunia said.
